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Richemont Mulls Price Increases to Counter Swiss Franc Strength

Price Rises for Watches in Eurozone Would Come in Addition to Regular Price Rises

An Excalibur model wristwatch by Swiss watchmaker Roger Dubuis, part of the luxury goods group Richemont. The group is considering price increases for its watches in the eurozone following the recent surge in the Swiss currency.
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GENEVA—Cie. Financière Richemont SA is considering price increases of 5% to 7% for its Swiss watches to counter the impact of the sudden surge in the Swiss franc.

The likely move by Geneva-based Richemont, the world’s second-biggest luxury company, follows the sharp rise in the value of the franc versus the euro after the Swiss central bankscrapped its currency cap of 1.20 francs per euro last Thursday.

The rise reduces the value of Richemont’s sales in euros, putting pressure on profitability.

The price rises would come in addition to the normal price rises and apply only to the eurozone, where it nets around 30% of its sales.

Late last year Richemont, which owns Cartier, IWC and Piaget watch brands, increased its prices in Russia to counter the weakness of the ruble.

Roger Dubuis, one of Richemont’s most expensive brands, has already decided to increase the price of its watches by 7% in the eurozone.

The Geneva-based brand, which sells most of its watches for more than 100,000 Swiss francs, said it didn’t expect its sales to take a hit as a result of the price rise.

The brand is also cutting its prices in Switzerland by 4% to 6% so tourists don’t buy their watches elsewhere. The county is one of its most important markets with a significant double-digit share.

In an interview at the Salon International de la Haute Horlogerie, CEO Jean-Marc Pontroué said he wanted to preserve the tradition of tourists buying Swiss watches when they visited the Alpine country, rather than going elsewhere.

“We don’t think we’re going to lose customers,” said Mr. Pontroué, though he described the rise in the franc as “brutal.”

Cartier, the world’s largest branded jewelry maker and Richemont’s biggest brand will also be increasing its prices to deal with the franc appreciation.

And the new price tags are being brought forward. The company is increasing its prices in Europe by 5% for watches and jewelry this month, higher than its annual price rise of 3% in 2014.

Chief Executive Stanislas de Quercize said Cartier was also looking to increase the efficiency of its factories in Switzerland.

“This is affecting all the watchmakers in Switzerland,” he said in an interview.

“We have been through volatility before,” he said, adding Cartier would continue to work on new price points and new products to ensure demand wasn’t affected.